The Canadian dollar continued strengthening against most currencies due to the increase in oil prices. Sustained economic growth and strong economic statistics, which would seem to support the yen, do not change the situation, although the upward trend continues to lose its intensity.
It should be noted that the CAD may soon lose one of the factors which have supported it for the last few months. Analysts of the oil market agree that in 2018 the price for oil will be more stable. Likely significant price hikes can be left in the past. The last price increasing was caused by fears of investors due to possible disruptions in oil supplies from Iran, as well as the rising demand for petroleum products in the United States due to cold weather. The increase in oil demand in the US has been confirmed with the latest data from the U.S. Department of energy, which showed decreasing of oil reserves by 7,419,000 barrels. But all these factors are temporary and in the near future it is expected that we would see a significant price correction. Thus, the CAD will be supported only by economic factors and monetary policy.
Today the market is waiting for data about the Canadian economy, such as trade balance, the employment market situation, and the index of business activity, so volatility will increase by the end of the day. The latest data on the Canadian economy showed an improvement: the Industrial Product Price Index (IPPI) in Canada rose by 1.4 percent in November of 2017, beating the expectations of investors; the index of business activity in the manufacturing sector amounted to 54.7 in December, and the level of employment is rising for the 15th consecutive month.
Oscillators (MACD, RSI, Stochastic) unanimously point to the rates in the overbought zone, so in the near future we can expect some price correction. Thus, in the medium term, short deals would be most effective. At the same time, the release of economic statistics in Canada today might also be able to support the CAD for some period that allows to make a profit with deals to BUY in the short-term trading.
